TOP NEWS

Monday, March 13, 2006

Interview with Mark Goodstein, X PRIZE Foundation

My interview this morning is with Mark Goodstein, who recently joined the
X PRIZE Foundation. The X PRIZE foundation (www.xprizefoundation.com) is
the organization behind the Ansari X PRIZE, the $10M award that was given
for putting a vehicle into space, and is now setting up a new award and
competition in the area of energy. Mark was most recently at X1, and was a
founder of GoTo.com (now Overture) along with being an early employee of
Idealab. Mark is Executive Director of this new prize effort.

Ben Kuo: Mark, thanks for the interview. For those few readers who are not
familiar with the X-Prize foundation, tell me a little bit about what its
purpose is, and what this new prize is about?

MG: As you know, in 2004, the Ansari X-Prize awarded $10 million to Burt
Rutan and SpaceShipOne for successfully completing the launch of a single
vehicle, with 2 people, 100km high in less than two weeks. The challenge
was laid down in 1996, and it really disrupted the commercial space
industry, doing what many said was not possible. In doing so, it seems to
have spurred the creation of a consumer—albeit a very rich consumer—space
flight industry, with Richard Branson and everyone else now doing this.
There was lots of excitement, and it really seemed to capture the public's
imagination—that regular people could go to space. In the wake of that
success, a bunch of very important people reached out and came on the
board of the X-Prize foundation. They challenged the foundation to come up
with a strategic plan that would basically make them the Nobel Prize of
the future—meaning a prize that induces future advances rather than
recognizes past accomplishments. People like Larry Page of Google and
Craig Venter have come on board, and given the foundation the financial
and political wherewithal to expand. The foundation decided to expand into
genomics, energy, and education with its prizes. In the energy side, we
toyed around with various ideas and settled on the automotive industry.
Automobiles right now suck up sixty percent of America's petroleum. The
transportation section is an enormous user of energy. This started several
months ago, when we had a roundtable with Jim Woolsey and other
ecopolitical hawks, and had a meeting at the Google headquarters with Al
Gore. At each meeting we talked along the lines of emissions and what we
could do for a prize that sought to spur the design and production of
hyper-efficient vehicles. Everyone is very passionate about the subject,
regardless of their political or technical ideas. We wanted to see what
will actually change an industry that is so mature, and so seemingly
resistant to change that the gas mileage of the original Model T is better
than the average gas mileage of vehicles on the road today. Of course, the
Model T was much lighter, and didn't have the same safety standards, but
if you look at the computer, which went from taking up huge buildings and
now fits into your hand in a cell phone, the automotive industry at large
hasn't made much progress in the last 100 years. The idea now is for us to
come up with a set of rules. For prizes, rules are everything – rules that
can spur public excitement and interest and team involvement that the
Ansari X Prize did, but have even larger impact – on transportation and
energy. Prizes have an old background, from the Longitude Prize (which was
chronicled in a story and miniseries) and the Spirit of St. Louis, which
was a $25K prize that led Charles Lindbergh to fly across the ocean. In
the case of the Ansari X Prize, people spent $100 million to win that $10
million prize. There's a magnification factor involved in inducement
prizes that benefits society. That's one of the things behind prizes as a
mechanism of advancement.

BK: How did you get involved in the X PRIZE foundation?

MG: I left X1 in April of las year, for a variety of reasons. It had been
three years, and I wanted to hang out with my dad who had had an accident,
and to take a break. I went off and helped a company raise money, and also
helped two other companies start up. Then, this came along and I couldn't
refuse. This touches on so many passions of mine it was hard not to be
excited. Peter Diamandis and I talked and we hit it off immediately, and
we have the same vision on what it takes to get this thing done. Also, my
dad is a professor of physics at Caltech, and wrote a book “Out of Gas:
The End of the Age of Oil” which I was involved with, where I got to read
every chapter as it was written,

BK: What's the timeline for the prize?

MG: We're three weeks into this, with the idea that we will spend the next
eight to ten weeks talking to everyone we can possible talk to in the
industry. We're talking to political, industry, and regulatory
associations, from the NRDC and others to specific industry organizations
so we get enough feedback and that we don't embarrass ourselves when we
announce the rules. We will the announce the rules for public comment, and
get comments. It's trial by fire. We'll then open up the doors for
registration, and hope that we get hundreds and thousands of registrations
from the proverbial garage teams to those backed by big companies. The
idea is that we award the prize—and we have one or two individuals whoare
close to backing the purse—of $25 Million and manufacturing contracts, ala
American Idol, to the winner. We are close to the sponsorship side and
close to the purse, and are talking about a framework in which the prize
is open to the world in the July timeframe, and closes in two years time.
Of course, that could change, and so far nothing is written in stone.

BK: Do you think that the innovation will come out of the auto industry,
or are you looking at the. The auto industry seems behind the times.

MG: The auto industry faces obstacles—the pension/life support that
supports American life, but they also have a lot of capital and a lot of
knowledge.

BK: So perhaps the solution will come out of the technology industry?

MG: Technology people seem to appreciate efficiency more than the average
bera. But there's also the heavy tilt toward using software to make better
fuel injection, and lots of ways to make an efficient vehicle. Even more
so that companies have something to offer and help, ranging from companies
that retrofit Priuses to plug in vehicles, to companies developing smart
Lithium ion batteries that charge very quickly. It's very compelling for
the transportation industry. At the end of the day, we want a set of rules
that does not favor one technology over the other. We would like it if an
all electric vehicle has the same opportunity as a hydrogen powered
vehicle as well. There are two starting points in this brainstorm period,
with no bad ideas, and accepting everything with the rules, and we don't
want to tilt the field toward anybody. Technology to make an order of
magnitude of efficiency exists today. This is not about technology
innovation, although there might be technology innovation as a result of
the prize. We don't feel that this is the next prize for the next best
carburetor or next best fuel injection system. That said, we feel that the
market is the best proxy for many of the things we've been hearing about.
We've heard that people want the rules to make it that cars must be 4
seaters, handle 40kg of cargo, and have a range of X miles—but wait, if
the winner is the group that sells the most vehicles that's a proxy for
all of that—market acceptance. We're tilting that towards a significant
portion of the criteria.

BK: Are you going to include things such as cost factors, etc?

MG: Yes, but market acceptance as a proxy. We have heard that the smart
car that DaimlerChrysler sells has sold 45,000 cars, but they still lost
$5000 per car. And if they raised the prize by $6000 they'd lose more,
because they won't sell as many cars. We want the market to be a
determining factor in the winner.

BK: So it sounds like the X PRIZE foundation also is working on other prizes?

MG: There are other prizes in development, but I don't know what level
each is at. We are working on prizes in genomics and maybe even other
energy projects.